How We Get Here - The science, manufacturing, politics, and persuasion that just might end the pandemic The Vaccine Issue 37
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● QAnon reality check 6
● Misadventures with TikTok 16
● The wounded city 28
August 17, 2020 ● SPECIAL DOUBLE ISSUE
How We
Get Here
The science,
manufacturing, politics,
and persuasion
that just might end
the pandemic
The Vaccine Issue 37
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August 17, 2020
◀ A transmission
electron micrograph of
SARS-CoV-2 particles
1
SPECIAL ISSUE 37 The Path to a Vaccine: Where We Are, What Comes Next
38 The toughest challenges, most promising solutions, and weirdest science
40 Many coronavirus vaccine projects are taking unorthodox routes
42 Moderna and Germany’s BioNTech are racing to reinvent vaccination
46 Serum Institute of India may be the world’s best hope to produce enough doses
52 Reckoning with Big Pharma’s intellectual-property rights
54 Vaccine nationalism makes a deadly disease even worse
60 Without essentials such as vials and syringes, a vaccine is just a formula
COURTESY NIH
64 Fighting anti-vaxxer pseudoscience one viral video at a time
68 Bill Gates on how this all ends
◼ CONTENTS Bloomberg Businessweek August 17, 2020
◼ IN BRIEF 4 A new S&P 500 high ● Sumner Redstone dies at 97 ◼ COVER TRAIL
◼ OPINION 5 Joe Biden made a smart VP pick with Kamala Harris How the cover
◼ AGENDA 5 A virtual Democratic convention ● Alibaba’s Q1 earnings gets made
①
“So this week it’s all
◼ REMARKS 6 Only you can prevent QAnon from going mainstream about the path to a
vaccine.”
BUSINESS 10 Chevron bets that sticking with oil won’t make it a dinosaur “I’m thinking we play
1 12 Airports fight to stay aloft until travelers return this very direct and just
mainline it.”
15 Legal experts assess Round 1 of Congress vs. Big Tech
TECHNOLOGY 16 Is Microsoft ready to be TikTok famous?
2 18 Global investors rush to buy into India’s huge tech market
FINANCE 20 The streaming boom makes studio lots a real estate star
3 23 With mergers scarce, dealmakers scare up other work
“I sure hope it’s not an
ECONOMICS 24 The wreckage in Lebanon dates to long before the blast oral vaccine, but the no-
needle thing is clever!”
26 ▼ College towns get a lift from stranded foreign students
“Can I see some
different arms?”
2
“FYI, you don’t give a
baby a shot in the arm.”
“I’ve looked at so
many arms, I don’t even
know what they look
like anymore.”
CAFE: PHOTOGRAPH BY AMANDA J. CAIN FOR BLOOMBERG BUSINESSWEEK
POLITICS 28 U.S. cities face a post-pandemic future of rising inequality
30 A Bernie Democrat could flip a red Texas district
31 Chipping away at social media’s online speech shield
SOLUTIONS / 32 How a U.S. company locks out Chinese counterfeiters
SMALL BUSINESS 34 Rethinking mass tourism in its Spanish birthplace
35 Connecting Indian laborers with jobs in distant cities
How to Contact Bloomberg Businessweek
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Bloomberg Businessweek By Benedikt Kammel
IN BRIEF
○ Globally, the number of
Covid-19 cases breached
○ Lebanon’s
embattled
20m
after doubling in six weeks.
More than 745,000 have
government
stepped down
on Aug. 10.
died. Russia registered
the first vaccine, which
it claims effectively
Protesters say years of negligence
provides immunity. Among and mismanagement caused the
those who’ve already devastating explosion that rocked
Beirut on Aug. 4. The blast in the
been vaccinated: one of city’s port district, where dangerous
President Vladimir Putin’s ○ Protesters continued demonstrating in Belarus, despite clashes with riot police. materials had been stored without
President Alexander Lukashenko, who’s been in power for 26 years, claimed precautions, killed more than
daughters. 54 a landslide victory in elections on Aug. 9. His rival, opposition leader Svetlana 150 people and left hundreds of
Tikhanovskaya, fearing for her safety, fled to neighboring Lithuania. thousands homeless. 24
○ Hong Kong police ○ President Trump signed ○ After the promise of a
on Aug. 10 arrested an executive order on Aug. 7
○ McDonald’s
media tycoon Jimmy Lai banning U.S. entities from sued former CEO $765m
and several of his top dealing with WeChat—along Steve Easterbrook government loan on July 28
executives, applying a with ByteDance’s video caused a frenzied stock
new security law that platform TikTok—as of
for attempting to surge for Eastman Kodak,
opponents say seeks to Sept. 20. The messaging cover up sexual the shares came crashing
4 silence political criticism app, which is owned by relationships back down to Earth.
and dissent. Chinese social media Congress and regulators
empire Tencent, has about
with several are looking into whether the
employees. company illegally disclosed
19m
users in America; it now
the loan—which has now
been suspended—to news
outlets before informing
risks being dropped from investors. Kodak said it’s
Apple’s and Google’s The fast-food chain is trying to aware of the probe related
recover tens of millions of dollars in
mobile stores. 16 severance pay from Easterbrook,
to the loan announcement.
who was terminated last fall.
○ On Aug. 12, the
○ Media
○ “This is a good S&P 500 jumped above
its highest-ever closing mogul
level, briefly topping BELARUS: MARINA SEREBRYAKOVA/GETTY IMAGES. HARRIS: ALEX EDELMAN/BLOOMBERG
day for our country. Sumner
3,387
The index went through
Redstone has
died at the
the trough following its
last peak in only 175 days, age of 97.
faster than any prior return
from a 20% plunge.
Over five decades, Redstone amassed
Former President Barack Obama lauded Joe Biden for an entertainment empire that included
pick
king California Senator Kamala Harris as his running Viacom, Paramount Pictures, and CBS,
mate. Harris is the first Black woman and first Asian controlling a library of pop culture titles
Ame erican on a major party presidential ticket. stretching from Rugrats to Titanic.
◼ BLOOMBERG OPINION August 17, 2020
Biden’s Smart VP
them had their differences and disagreements. But that didn’t
stop him from picking her.
Pick Tells Us a Lot In fact, knowing Joe as I do, I’d be willing to bet it made
her even more appealing. And here’s why: Biden knows that
in building a strong team, it’s imperative to surround yourself
● By Michael R. Bloomberg with people who aren’t afraid to tell you exactly what they
think—especially when they think you’re wrong. Harris has
the guts to do that for Biden, just as Biden did it for Obama.
Every smart executive knows that you’re only as good as the It may be the most important role a vice president can play.
team you build around you. It’s a lesson I’ve learned over my And over the past four years, we’ve seen what happens when
entire career, and a lesson that clearly escaped our current a vice president insists that a naked emperor is fully clothed.
president. Joe Biden just proved he gets it. By picking Senator Biden’s selection bodes well for the kind of president he
Kamala Harris as his running mate, Biden has selected a would be: someone who prioritizes competence, listens to
strong governing partner for his White House. and respects different viewpoints, embraces diversity, and
At a time when the country is facing the worst series of cri- builds teams with strong leaders. We need those values back
ses in generations, we have seen how debilitating it is to have in the White House more urgently than ever. For more
a White House that’s in a constant state of chaos and turmoil, commentary, go to bloomberg.com/opinion
bouncing from one scandal to another, from one reckless
decision to another, from one broken promise to another, and
from one petty Twitter fight to another. ◼ AGENDA
The country needs stable, mature, responsible leadership
to pull us out of this ongoing disaster—and Senator Harris will
help Joe Biden deliver it. With his eight years as vice presi-
dent, Joe understands the value of having a partner who can
complement and balance the chief executive’s experience.
Joe’s decades in the Senate proved to be a major asset for 5
President Obama, especially his successful work with legisla-
tors to pass the Affordable Care Act. In the same way, Senator
Harris’s experience on Capitol Hill—and her leadership on
issues of racial equity and criminal justice reform—will be
invaluable in a Biden administration.
For instance: As district attorney of San Francisco, Harris
created one of the first reentry initiatives in the country, help-
ing to better prepare people who’d been incarcerated to apply
for jobs and rejoin their communities. She also pulled back
the curtain on problems within California’s criminal justice
system by making the data more transparent—because she
▶ Shopping Well Is the Best Revenge
understood the mantra we always lived by at City Hall in New Alibaba reports first-quarter earnings on Aug. 20. Post-
York: “If you can’t measure it, you can’t manage it.” Harris lockdown, China’s consumers are spending more on food
also brings management experience to the job. As attor- again, but apparel—the online-commerce giant’s strongest
ney general of California, she ran the second-largest justice category—has been slower to rebound.
department in the nation. In that job, and in the U.S. Senate,
she strongly supported universal background checks for gun ▶ Qantas releases ▶ On Aug. 19 the Federal ▶ The Joint OPEC-
its quarterly earnings Reserve provides Non-OPEC Ministerial
sales and laws that keep guns out of the hands of domestic on Aug. 20. The the minutes from its Monitoring Committee
abusers and other dangerous people. Australian carrier, which July 28-29 meeting, holds its next meeting
specializes in long-haul when the Open Market on Aug. 18 to craft a
I supported her in her race for the Senate in 2016 because routes, is cutting 6,000 Committee decided to response to slack oil
it was clear she wasn’t afraid to take on tough fights, and that jobs to adapt to an keep borrowing costs demand, which has fallen
implosion in travel. at close to zero. during the pandemic.
includes the fight for voting rights. The voter suppression
efforts made by Republicans across the country are an affront
ILLUSTRATION BY LAUREN MARTIN
to democracy and a major setback for civil rights. ▶ Norway’s central ▶ Streaming their Covid- ▶ Brazil’s central bank
bank, Norges Bank, sets era convention from publishes its survey of
There are a lot of other reasons Biden picked Harris, its benchmark rate on Milwaukee on Aug. 17-20, economists on Aug. 17.
including that, over the course of the campaign, she demon- Aug. 20. Borrowing costs Democrats will officially The estimates on
are expected to remain name Joe Biden and growth, inflation, and
strated she was ready to be commander-in-chief. But as at zero through the end Kamala Harris as their the key rate will provide
attention focuses on her, it’s important to remember what of 2020 after three cuts candidates for president insight into the state of
earlier in the year. and vice president. the country’s economy.
the selection says about Joe. During the campaign, the two of
REMARKS
6
QAnon Crashes
The Internet Party
○ Is it too late to keep the amorphous ○ By Daniel Zuidijk
online conspiracy movement from
breaking into the mainstream?
◼ REMARKS Bloomberg Businessweek August 17, 2020
Imagine it’s Thanksgiving or Christmas dinner, the one “We’ve been clear that we will take strong enforcement
where the entire extended family shows up. There’s a little action on behavior that has the potential to lead to offline
corner of the long dinner table where you put the relatives harm,” the company tweeted as it detailed the crackdown.
most likely to be awkward, so they can chat among them- Twitter is suspending accounts for breaking existing rules
selves. You know who they are, the uncle and cousins who and will no longer highlight as “trending” or recommend
go on rants about Trump’s righteous war against an inter- content and accounts associated with QAnon. It will also
national cabal of pedophiles or Hillary Clinton’s imminent try to stop the movement from being played up in search.
arrest. Everyone else in the family remembers the stir that Users will no longer be able to share URLs associated with it.
corner caused when they claimed that Tom Hanks had a sex Twitter’s plan has parallels with an earlier crackdown by
slave. No one with any sense took them seriously. Picking a Reddit in 2018 after its forums became QAnon hotbeds. The
fight would sap your energy and divide the clan. most prominent subreddits associated with the movement
For the most part, social media companies have been came down, and new ones even hinting they had something
content to treat QAnon like those relatives. (And those are to do with it could not be created. Reddit’s move is consid-
actual QAnon beliefs.) None of the tech giants were really ered to be among the more significant blows against QAnon.
happy the amorphous online conspiracy movement was at But the tactics so effective on Reddit in 2018 may not
their party, but it wasn’t worth the trouble to disinvite them. work for Twitter. The QAnon movement is now a very
As long as they kept to their own corner of the internet, the different beast from the one that used to populate now-
QAnon faithful could enjoy turkey and stuffing with every- deleted subreddits such as r/TheGreatAwakening. If Twitter
one else. no longer wants QAnon to come to Thanksgiving, the con-
But everything has changed. In the annus horribilis spiracists can still put on a mustache and a hat and sneak
of 2020, the social networks can no longer afford to treat in through the back door. There’s nothing to stop banned
QAnon the same way. Why? Because it’s left its corner and QAnoners from returning to engage in “digital guerrilla war-
is messing with the rest of the table. fare,” says Marc-André Argentino, a researcher at Concordia
Memes emanating from the conspiracy group—which are University in Quebec who studies how extremist groups
tenuously united in the discredited belief that there’s a plot use online technology and co-authored a report from West
to oust Trump from the presidency—have made their way Point’s Combating Terrorism Center titled “The QAnon 7
into the social media accounts of everyone from Michael Conspiracy Theory: A Security Threat in the Making?”
Flynn (who was briefly national security adviser) to White All they have to do is get “a bunch of new sock puppet
House social media adviser Dan Scavino. Sometimes these accounts”—camouflaged identities—to stage incursions on
memes can be as innocent as an image featuring Trump Twitter with fresh tweets.
with a QAnon slogan (as was the case for Scavino), but at For QAnon adherents, Argentino says, “Twitter is the
other times they take on more sinister overtones such as battlefield.” A ban just reinforces and vindicates its ideology,
the oath to QAnon—“Where we go one, we go all”—which which posits that any action taken against it is “part of war.”
Flynn posted on July 4. Trump’s account has been known “It might motivate people more, because you’re doing some-
to retweet accounts aligned with QAnon. thing more than just posting memes,” he says. “The damage
It goes down the political chain. QAnon-sympathetic can still be done, so I don’t think they are going anywhere.”
Republican candidates will be on the ballot for the Senate Data from Facebook-owned analytics platform
and the House in November, including Lauren Boebert in CrowdTangle show a surge in interactions around QAnon
Colorado, Jo Rae Perkins in Oregon, and Marjorie Taylor content on other platforms following Twitter’s July 21
Greene in Georgia (who won an Aug. 11 runoff against an announcement. Posts on social networks seen to be friend-
opponent endorsed by the House minority whip). It also lier to QAnon—such as Parler and MeWe—rallied supporters
seems to be manifesting outside the U.S. In February, in not to take the Twitter crackdown lying down. “The fight
Hanau, Germany, a lone gunman espousing QAnon-like needs to continue on Twitter,” as one Parler account put it.
beliefs massacred nine people in bars frequented by immi- Argentino isn’t the only one who’s skeptical about the
grants before killing his mother and himself. effect of bans. “Account and content takedowns play a
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (2)
The Covid-19 pandemic has only helped the movement useful role in limiting the spread of harmful content, but
expand: Hundreds of thousands of people with nothing else they can only ever be one part of the solution,” says Jacob
to do have been exposed to the fringe fulminations. The Davey, one of three authors of “The Genesis of a Conspiracy
Institute for Strategic Dialogue (ISD), a London think tank, Theory,” the ISD’s recent report on QAnon. It details the
says that from March through June, QAnon-related posts evolution of the movement from late 2017, when several
surged on Facebook and Twitter. While its believers were anons—nameless online personalities—coalesced around
far from the only ones trying to discredit the use of masks or posts by another who claimed to have “Q” security clear-
cast doubt on vaccines, they were among the largest groups. ance from the U.S. Department of Energy. “A cursory search
Twitter took action on July 21, announcing measures of Twitter reveals that it still has a thriving QAnon commu-
targeting “so-called ‘QAnon’ activity” across its platform. nity,” Davey says.
◼ REMARKS Bloomberg Businessweek August 17, 2020
Indeed, a Bloomberg search of terms associated with to count on QAnoners for votes, its paranoid style is almost
the conspiracy movement brought up multiple Twitter on the verge of political normalization.
accounts with tens of thousands of followers. While they In one important aspect, though, QAnon is like Islamic
didn’t bear the usual hallmarks of QAnon supporters— State: Adherents often start from a feeling of alienation and
such as the use of an illustrated Q—they all circulated QAnon then acquire an unquestioning faith in the righteousness of a
posts from the forum 8kun, the movement’s current home cause that gives vent to their frustrations. Davey says longer
base. They shared misinformation about Black Lives Matter term solutions are needed to minimize the damage. These
and Covid-19. include the “mass rollout of digital literacy initiatives, which
Crackdowns by one platform may no longer have much can help limit the uptake of conspiracy theories.” He says it’s
of an impact on the movement. Travis View, a longtime necessary to engage with and talk to believers and “hope-
observer of QAnon and presenter of the QAnonAnonymous fully help them disengage from the QAnon movement.”
podcast, says that even if companies were able to push A model for that kind of dialogue can already be found on
the movement off their platforms, the “delusional QAnon Reddit. Created in July 2019, the subreddit r/QAnonCasualties
style of thinking” would survive. He says there’s no way aims to be a resource for people with loved ones who’ve been
to “stamp down every single delusional conspiracy theory taken in by the movement. It currently has more than 9,000
that grabs hold in the online community.” Case in point members. Posts with titles such as “A letter to my Q BF!” and
is the recent popularity in QAnon and far-right circles of “This madness cost us our home” detail the consequences of
the “demon sperm” video, featuring several self-described having a friend or family member start believing in QAnon.
medical experts pushing the merits of hydroxychloroquine, The posts, describing angry confrontations in families, closely
including Dr. Stella Immanuel, who made the claim about echo the experiences of people who confront friends and rel-
the satanic origins of the illness. atives who’ve joined cults.
If crackdowns don’t work, how can tech companies and Underneath each post about losing a friend or relation to
others deal with a movement built around this miasma of QAnon, the subreddit’s users leave advice or words of encour-
misinformation? A good start would be for social media plat- agement. “Feeling like their whole personality has changed
forms to enforce existing rules, Davey says. “If platforms is such a shock,” said one comment. “The next few days are
8 were more effective in enforcing policies around authen- gonna suck,” another said on the prospect of having to spend
tic and transparent use, this could help strike a blow to just a few days with their QAnon-believing mother. “We can’t
the network.” Better enforcement of Facebook’s commu- deprogram people or get a loved one out of the cult, but at
nity standards on authenticity and safety could have dev- least we can offer support,” said ‘OreWins,’ one of the moder-
astating effects on the QAnon presence on its platforms. ators of the subreddit, communicating via Reddit’s chat func-
Policies designed to tackle disinformation also need to be tion. OreWins said the forum “helps people understand what
more rigidly enforced. QAnon is and how it gets its hooks into people.”
Still, it’s complicated. There are corporate regulations Bloomberg couldn’t verify the accounts in the forum, but
and then there are constitutional guarantees. Argentino they match what View has seen. “I sometimes call it the dig-
points out that many of QAnon’s followers aren’t actually ital zombie apocalypse, because it feels like this virus that
doing anything against the law. “Is QAnon really a prob- has been spreading to people’s minds through the inter-
lem to solve?” he asks. Before the pandemic, a lot of what net,” he says. He urges more investment in mental health
QAnon did, as toxic as it was, could be classified as protected as one way of dealing with QAnon, but he’s one of several
speech. Argentino says “there’s a delicate balance where experts who recognize that’s just one part of the battle. A
you can be very shortsighted and want to deal with QAnon, lot of QAnon supporters “feel like they’ve been let down
especially ahead of an election. But what are the ramifica- by institutions, and they don’t understand what’s going on
tions where this can be applied in other contexts that may behind the scenes,” he says. Recent criminal cases—includ-
have impacts on freedom of expression?” ing the Hanau shootings and a 2019 mob boss murder in New
“QAnon is not ISIS,” he says. The Islamic State group York—involved apparently troubled and erratic individuals
used platforms such as Twitter for recruitment or propa- who’ve latched onto the catch-all ideology.
ganda, and QAnon isn’t that sophisticated. While QAnon The big social media companies are now turning against
beliefs have a way of rapidly radicalizing some adherents, QAnon and its theories. But it may not matter if Twitter
Argentino says, it would require “individuals with greater is joined by Facebook and all the other apps in this cam-
organizational skills and operational acumen” to become paign. QAnon and its followers still have ways to come to
an actual threat. But, says View, “the potential for greater Thanksgiving dinner. Perhaps the best thing to do is what
harm is there.” should have been done all along. Don’t relegate your crazy
CREDITS CREDITS CREDITS
QAnon isn’t likely to be as harmlessly batty as the flat relatives to the far side of the table. Learn to engage with
Earth movement. Not with friendly platforms continuing to them even if you disagree, even if it’s difficult. Maybe that’s
let its followers post what they want. The conspiracy isn’t the best way to save them—and help everyone—while we
going to go away soon and, as the Republican Party begins still have time.IBKR charges
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Chevron Keeps It
part of the mix, just as biomass and coal are still
enormous parts of the mix today.”
Old-School
To activists alarmed at the urgency of the climate
crisis, Wirth’s comments are as out of touch as they
are predictable, coming from someone who profits
from the status quo. For unlike its rivals in Europe,
● As rivals go green, it’s Chevron is betting its future less on renewable
sticking with fossil fuels energies such as wind and solar and more on the
subterranean stuff derived from hydrocarbons. It’s
a multibillion-dollar gamble that would have been
Speaking to the Texas Oil & Gas Association in July, even less surprising before the coronavirus reared its
Chevron Corp. Chief Executive Officer Mike Wirth spiky head. By eviscerating demand for petroleum
assured his audience that the global clamor for clean products when business and consumer activity sud-
energy “doesn’t mean the end of oil and gas.” On the denly slowed, Covid-19 has shown the world’s big-
contrary, Wirth said, the energy business is simply gest oil and gas companies a vision of a bleak future
undergoing another of its natural transitions. “We’ll in which they’re neither wanted nor needed.
Edited by
find ways to make oil and gas more efficient, more A chastened BP Plc responded on Aug. 4 by
James E. Ellis environmentally benign,” he said. “And it will be a announcing dramatic steps to address climate BUSINESS Bloomberg Businessweek August 17, 2020
change, including an unexpected vow to reduce oil Shell Plc have cut their highly prized dividends.
and gas production 40% over the next decade; CEO Chevron and Exxon, which have pledged to sus-
Bernard Looney said the strategy was “amplified by tain their quarterly payouts, say they support the
Covid.” In sharp contrast, Exxon Mobil Corp. has “goals of the Paris Agreement,” but they haven’t
reiterated its commitment to being oil’s last man committed to zero carbon. They have targets to
standing decades from now. Chevron, for all of reduce emissions from their own operations but
Wirth’s prognosticating about crude’s bright future, not those of their products, unlike the Europeans.
is pursuing a more nuanced path that embraces Their stances are politically easier in the U.S.,
something frequently alien to Big Oil: flexibility. where fossil fuels are a big job generator with
A chemical engineer and Chevron lifer, Wirth strong advocates in Congress.
rose through the business’s refining side, where he Rather than switching to low-carbon fuels like the
says you can’t rely on oil prices and must “make Europeans, Chevron is avoiding extravagant bets and
your own margin” each year. He has a wait-and-see, resisting moves into renewables, where it has little
stick-to-what-you-know, no screw-ups approach. The expertise and perceives returns to be lower. Wirth is
company he took over in 2018 was contending—like leery of repeating mistakes such as Chevron’s disas-
Exxon—with a slew of globe-trotting missteps that trous investments in geothermal power 20 years ago.
cost too much and produced too little in returns. “For our shareholders, we’ve got an obligation to
Wirth cut Chevron’s capital spending to half invest in things we can do wisely and that can gener-
what it was in 2014 and shifted its focus to shale. ate good returns,” he told Bloomberg last year. “We
Although drilling in shale can be more pricey than haven’t seen that in the power sector.” A Chevron
conventional oil extraction, it also produces energy spokesman says many experts believe oil and gas
more quickly. Wells can be drilled and crude flow- will constitute half of global energy consumption for
ing within weeks, vs. 5 to 10 years for offshore plat- at least two more decades, especially in developing ○ Wirth
forms or liquefied natural gas terminals. Shale wells countries. “All our actions are consistent with our
also can be shut down quickly when falling prices long-standing financial priorities—and No. 1 is to pro-
dictate—as they were when oil dropped below zero tect the dividend,” he says. 11
dollars per barrel in April, and some producers had In theory, Chevron wants to become a nimble,
to pay buyers to take crude off their hands because low-cost energy operator, capable of swift responses
there was no room to store it. Other supermajors to global demand patterns. In practice, that’s a
have expanded their shale production, but none has ways off. Just last year the company admitted it
been as aggressive as Chevron. It’s now the biggest ran 25% over budget on a $45 billion oil project in
producer in West Texas’ prodigious Permian Basin. Kazakhstan, recalling some of the worst excesses of
The day before Wirth’s speech to the Texas oil- the days before 2014, when oil traded at more than
men and -women, Chevron acquired Noble Energy $100 a barrel. Chevron also posted a second-quarter
for $5 billion in stock. The rare post-virus deal gave loss of $3 billion—its worst in at least three decades—
the company additional shale acres in both the and wrote down $4.4 billion in assets. It’s ratchet-
Permian and a basin in Colorado, as well as a gas ing back on the Permian and other shale plays. To
field off the coast of Israel. The price was right; only Wirth, this is flexibility in action. To critics, the deep
a few months before, Noble was worth $10 billion. losses are another nail in the coffin of fossil fuels.
“We certainly believe that having a balanced Climate activists scoff at Chevron’s relatively
capital program that has some large-cycle com- small investments in biofuels, wind, and solar to
plex projects but also a very healthy component support oil production, claiming they have little
ILLUSTRATION BY FELIX DECOMBAT. WIRTH: SIMON DAWSON/BLOOMBERG
that is more flexible is the right mix for our com- discernible effect on global emissions. But Mariana
pany,” Wirth said after the transaction. He likes to Liokopoulou, energy security research fellow at
talk about being able to react quickly to what he the NATO Association of Canada, says Chevron’s
calls “price triggers,” a big departure from the days approach, though not purely climate-driven, “can
when standard industry practice was to accumulate help them generate the quickest possible cash flows
as much carbon as possible and pump at full tilt. in the short to medium term.” She says that reve-
So far, Chevron’s public approach to climate nue could then be used “to progressively diversify
change is in contrast to those of BP, Shell, and into low-carbon assets and renewables, provided
France’s Total. All three have pledged to speed up that climate change is also recognized as a priority
their shift to cleaner fuel sources so as to align with of the U.S. administration.”
the Paris climate agreement and become “carbon But what if oil demand doesn’t recover for years,
zero” by 2050. To underwrite their green transitions as Shell CEO Ben van Beurden recently suggested?
at a time of low oil prices, BP and Royal Dutch And BP’s Looney won’t rule out the possibility◼ BUSINESS Bloomberg Businessweek August 17, 2020
that post-pandemic demand has already peaked. Wirth pointed to whales as a case in which oil
Those are horrifying prospects for oil companies, companies were able to expand their traditional
which have long thrived as providers of a scarce business while producing positive change for the
resource that underpins the world economy. The environment. Back in the 19th century, the crea-
resource is scarce no longer, because of shale, tures “were being whaled into extinction,” Wirth
and BP is predicting that crude prices in coming said, because their oil was needed as fuel for
decades could trend as much as 20% lower than the lighting. Then crude oil companies came along with
company forecast only two months ago. kerosene to replace it. “Ironically, ‘Save the whales’
The risk for Chevron is that it gets left behind, is a catchphrase for saving the environment,” he
producing a lot of climate-endangering oil and gas said. “In fact, our industry helped save the whales.”
that no one needs. Wirth insists he’s comfortable Whether sticking with fossil fuels will make endan-
with that risk, because, like so many energy tran- gered species of Chevron and its brethren remains
sitions, this one is “misunderstood.” As he told the to be seen. �Kevin Crowley and Bryan Gruley
Texas Oil & Gas Association, new technologies but-
THE BOTTOM LINE Chevron’s recent $5 billion buyout of Noble
tressed by free markets will help oil giants prosper Energy is a testament to its belief that expanding in shale and other
even as they tackle climate issues. fossil fuels makes sense, despite fears that oil demand is peaking.
Airports Are Catching
12
Covid, Too ● After they spent big to become retail and leisure
hubs, a travel dearth grounds their plans
In surveys of the world’s best airports, Singapore’s new ways to make money include turning parking
Changi regularly ranks near the top. A leader among lots into drive-in movie theaters or unused land
utilitarian transportation hubs that have been trans- into renewable-energy farms. “What Covid-19 has
formed into upscale shopping destinations, Changi taught airports is they need to diversify their reve-
Airport in 2019 added Jewel, a futuristic playland nue sources,” says Max Hirsh, research fellow at the
with 1.5 million square feet of stores and attractions University of Hong Kong and managing director of
including a rainforest, hedge maze, and the world’s Airport City Academy, which offers airport-related
highest indoor waterfall. And the government had executive training courses. “Airports are going to
planned this year to begin selecting contractors to have to figure out different ways to make money.”
work on a huge fifth terminal to boost annual capac- It’s a stark change from the pre-virus era, when
ity 55%, to 140 million passengers. airlines were desperate for more runways, gates, and
Then came Covid-19. Traffic at the airport— terminals to sustain a global aviation boom. Now
long a preferred hub for globe-girdling business pandemic fears and travel bans have chilled inter-
travelers—fell more than 99% in April, May, and est in taking to the skies and brought much business
June from a year earlier. Changi is hunkering down, and international travel—the most lucrative kinds for
mothballing two of its four terminals and delaying airlines and airports alike—to a halt.
plans to build the additional one. France’s Vinci, which operates London’s
At airports the world over, the pandemic has Gatwick and 44 other airports in Asia, Europe,
wrecked a business model that relies on a steady Latin America, and the U.S., reported a 96% plunge
influx of airlines and their free-spending passen- in passenger traffic in the second quarter. Japan
gers. So operators stuck with lifeless buildings are Airport Terminal Co., which runs Tokyo’s Haneda,
trying to dream up fresh ways to generate income. had an operating loss of about 17.5 billion yen
Changi is encouraging Singaporeans who aren’t ($165 million) in the three months ended in June,
traveling to shop tax-free at the airport’s struggling with revenue falling 87%.
retailers. It’s also selling three-month admission The International Air Transport Association
packages to Jewel’s activity area. For other airports, expects $100 billion in aviation industry losses by◼ BUSINESS Bloomberg Businessweek August 17, 2020
◀ Beijing’s Daxing (top)
and Singapore’s Changi
airports
13
BEIJING: CHEN XIAO/GETTY IMAGES. SINGAPORE: SUHAIMI ABDULLAH/GETTY IMAGES◼ BUSINESS Bloomberg Businessweek August 17, 2020
next year, with a return to pre-pandemic traffic Authority Hong Kong Chairman Jack So said in
not happening until 2024. Even worse, interna- June, when announcing a HK$35 billion ($4.5 bil-
tional traffic may not recover before 2027, Philippe lion) loan for its expansion project, known as the
Pascal, executive director of finance, strategy, and Three-runway system (3RS). “The pandemic crisis
administration for Aeroports de Paris, said in a has not distracted us from our long-term vision of
July 28 call with analysts. securing the airport’s position as a leading interna-
Still, even though their customers are largely tional aviation hub, for which the development of
gone, facilities must stay open for business, says the 3RS holds the key,” he said.
Mirjam Wiedemann, a lecturer and researcher in avi- When passengers return, airports should
ation at the University of South Australia. “No gov- reassess how they make money, says Greg Fordham,
ernment can allow the hub to close,” she says. “A Melbourne-based managing director of Airbiz, a
major airport closing, that’s unthinkable.” consulting firm that’s worked on airport projects
Large operators are asking creditors for help. in Brussels, Dubai, Hong Kong, and Singapore.
Heathrow Airport Holdings Ltd. on July 9 said it This could include arranging hotels for air crews
secured a covenant waiver until 2021. Fraport AG and directly providing passengers with everything
Frankfurt Airport Services Worldwide has also from fine dining to health treatments. The crisis “is
asked lenders for assistance. The top 10 airports a great opportunity for airports to get involved in
in the U.S. face payments in interest and princi- things that they haven’t in the past,” he says.
pal totaling almost $14 billion by 2022, according But for now, airports are concentrating on
to Bloomberg Intelligence. tweaking their operations to address the realities
While they await a rebound, some airports
have tried to put their real estate to use. Southern
California’s Ontario International operated a free Total Value of Airport Construction Projects as of October 2019
drive-in movie theater in a parking lot in June and ◼ Existing airports ◼ New airports
July. To generate long-term revenue, Edmonton
14 International in Alberta last month announced plans Number of projects
to open a 627-acre, 120-megawatt solar farm. Munich 400
Airport in June reached a deal with DHL Express $228b
Germany to build a €70 million ($82 million) cargo
facility on land currently used for parking. 200
To save money, many are firing workers or clos- $138b
ing facilities. Copenhagen Airports will cut 25% of its
2,600-person workforce and reduce costs by 325 mil- 0
lion Danish kroner ($51 million), the operator said
on Aug. 5. Corporación América Airports last month Asia Europe North South Middle Africa
America America East
said it would temporarily close Aeroparque Airport,
one of two airports serving Buenos Aires, for about
DATA: CAPA CENTRE FOR AVIATION
four months to do renovation and expansion work.
There’s also the possibility of government of pandemic-era travel. New Zealand’s Auckland
aid. In the U.S., the Cares Act included $10 bil- International said on Aug. 3 that it will split its inter-
lion that went mostly to regional and commer- national terminal into two zones—one for passengers
cial airports. In negotiations for the next round traveling to and from countries in New Zealand’s
of stimulus, Republicans have proposed another safe-travel corridors, the other for travelers requir-
$10 billion, mostly for large hubs. Debt investors ing isolation or quarantine. The airport has also sus-
have so far been accommodating: Dallas Fort Worth pended NZ$2 billion ($1.3 billion) of capital projects.
International Airport sold $2 billion of bonds in July, “It’s still unclear what the recovery looks like,”
though coronavirus cases in Texas were surging. says Auckland International Chief Executive Officer
Some Asian governments are betting the pan- Adrian Littlewood. “You can’t expect governments
demic will be over by the time expansion projects to come up with all the answers. The sector needs to
are done. In Thailand the first phase of a $9.4 billion get on its feet and propose answers to help figure out
airport project south of Bangkok is due to open in what living with this looks like.” �Bruce Einhorn
2024. Hong Kong is spending $18 billion to expand and Angus Whitley, with Kyunghee Park
its airport. China, South Korea, and Vietnam are
THE BOTTOM LINE Airports such as Singapore’s Changi saw
continuing costly building projects, too. traffic crater in the months following the pandemic’s surge. That’s
Planners must look beyond Covid-19, Airport forcing many of them to put expansion plans on hold.Format Tech Antitrust Scorecard
U.S. tech giants have enormous influence over what we buy, read, see,
and think. But is their market power illegal? At a July 29 House hearing,
lawmakers leveled monopoly-abuse accusations at the leaders of Amazon,
Apple, Facebook, and Google. We sift through the charges, compile the
evidence, summarize the CEOs’ defenses, and ask experts whether the
lawmakers made their case. —David McLaughlin, Ben Brody, and Naomi Nix
Amazon Apple Facebook Google
THE ALLEGATION THE ALLEGATION THE ALLEGATION THE ALLEGATION
Amazon.com Inc. uses predatory Apple Inc. is an unfair gatekeeper Facebook Inc. uses “copy, acquire, Democrat David Cicilline of Rhode
pricing to crush rivals. In 2009 to its App Store, controlling the and kill” against rivals. It bought Island, who chairs the House
it decided Diapers.com was a fate of developers by deciding Instagram in 2012, seeing the site antitrust subcommittee, fired off
significant threat and started which apps get in and sometimes as an emerging threat. In 2014 it the hearing’s first question to
a price war against it. Amazon playing favorites. Democratic bought WhatsApp, a rival to its Google CEO Sundar Pichai: “Why
slashed prices so much it lost Representative Val Demings of Messenger. Democrat Pramila does Google steal content from
15
$200 million in a month on California said Apple’s policies Jayapal of Washington said honest businesses?” Cicilline said
diapers. It then acquired Diapers allowed it to pick app winners and Facebook identified Instagram as the company uses that content to
.com owner Quidsi Inc., cut losers. “Apple rules mean Apple a competitive threat “and told them create a “walled garden” and to
promotions and discounts, and apps always win,” she said. that if they didn’t let you buy them keep users on Google properties
ultimately increased prices, said up, there would be consequences.” rather than directing them to sites
Democratic Representative Mary THE EVIDENCE that originated the information or
Gay Scanlon of Pennsylvania. Apple agreed in 2016 to halve its THE EVIDENCE offer more relevant data.
typical 30% App Store fee for Emails and texts show that CEO
BEZOS, COOK: GRAEME JENNINGS/WASHINGTON EXAMINER/BLOOMBERG (2). ZUCKERBERG, PICHAI: MANDEL NGAN/AFP/BLOOMBERG (2)
THE EVIDENCE Amazon in a deal to put its Prime Mark Zuckerberg asked former THE EVIDENCE
In an internal email, North Video app on Apple’s mobile Chief Financial Officer David Cicilline cited an internal Google
American consumer sales chief devices and TV set-top box. Ebersman in February 2012 memo from 2006 that observed
Doug Herrington said Amazon The companies agreed to a 15% about buying Instagram and other websites were getting “too
needed “to match pricing on revenue share for customers who Path, a now-defunct social media much traffic,” so Google decided
these guys no matter what signed up through the app and no company. Zuckerberg said they to “put an end to that.”
the cost.” share for users who’d subscribed had established “meaningful”
elsewhere. Internal emails brands, and “if they grow to a large THE CEO DEFENSE
THE CEO DEFENSE also show that CEO Tim Cook scale they could be very disruptive Pichai disagreed with Cicilline’s
At the hearing, Chief Executive promised to fast-track approvals to us.” He agreed that part of his “stolen content” characterization.
Officer Jeff Bezos said he didn’t for apps from China’s Baidu. motive in buying Instagram was to He said Google supports
remember raising prices after the “neutralize a potential competitor.” 1.4 million small businesses
Quidsi deal. “This was 11 years THE CEO DEFENSE with more than $385 billion in
ago,” he said, adding that price Cook said access is “very wide,” THE CEO DEFENSE economic activity. Pichai also
discounts to attract customers to the App Store. “There’s fierce Zuckerberg said Instagram said Google conducts itself “to
are a traditional retailer tactic and competition for developers, succeeded because Facebook the highest standard,” adding
that customers had many other and we want every app” on invested in it. “With hindsight it that it has numerous competitors,
options for diaper purchases. the platform, which has about probably looks like, obvious that including Amazon, where “over
1.7 million available. He equated the Instagram would have reached the 55% of product searches
THE LEGAL ANALYSIS competition to attract developers scale that it has today, but at the originate.”
Predatory pricing cases are to a “street fight for market share time it was far from obvious.”
difficult. The government would in the smartphone business.” Cook THE LEGAL ANALYSIS
have to show that Amazon set said Apple has never increased the THE LEGAL ANALYSIS An antitrust challenge against
diaper prices below acquisition commission it charges developers, Jennifer Rie, an antitrust expert Google could have a shot at
costs and that, once a rival was and all apps are treated equally. at Bloomberg Intelligence, says success, says Bloomberg’s Rie,
driven out of business, Amazon a monopoly-abuse case might if it could show the company’s
was able to recoup losses by THE LEGAL ANALYSIS succeed, but forcing Facebook to actions are excluding or
raising prices above a competitive Just charging developers a high divest Instagram would be tough, substantially foreclosing rivals
level. “The hardest part of this commission isn’t enough to bring unless the U.S. can prove there’s from access to the market. A case
burden is this recoupment an antitrust case, says Hal Singer, been an actual loss to competition could claim that Google, without
requirement,” says George a managing director at consulting that needs restoring. That will be legitimate business justification,
Washington University law firm Econ One. There needs to be difficult to show given Instagram’s demoted rivals’ content in search
professor William Kovacic. “Show evidence of some restraint that current success and uncertainty results so that users couldn’t
me how consumers are worse off.” harms competition. about any independent future. readily see it.Bloomberg Businessweek August 17, 2020
2
T A Dangerous
E Dance
C For Microsoft
H
N
O
L
16
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Buying TikTok would give the software giant a lift
Edited by
David Rocks with consumers but risks unwelcome scrutiny TECHNOLOGY Bloomberg Businessweek August 17, 2020
For the better part of a decade, Microsoft Corp. has there’s a potential way out via a Microsoft deal. Monthly active users
of the Android app in the
largely steered clear of the kinds of products and ByteDance has repeatedly denied allegations that U.S., by age group, in July
services that stir up controversy—it is, after all, a it shares data with the Chinese government. But LinkedIn
company whose boldest foray into social network- after it became clear Trump wasn’t going to back TikTok
ing is the buttoned-down LinkedIn. A deal to buy down, the company indicated it might be open to
the video streaming app TikTok, an idea President selling part of its video service.
Trump is pushing, would change all that, landing A purchase would steer Microsoft into treach- 10 to 19
Microsoft in the kind of political minefield it’s man- erous territory, as many users are children,
32%
aged to avoid in recent years. “Microsoft has hap- sometimes dressing or dancing provocatively or
pily stayed out of the techlash so far,” says Ashkhen exchanging messages with adults without parental 20 to 29
Kazaryan, director of civil liberties at TechFreedom, consent. And mixed in with all the goofy stuff are
a libertarian think tank in Washington. “If they get clips promoting dangerous Covid-19 conspiracy
TikTok, that’s going to change.” theories, nationalists raging about undocumented 30 to 39
Four days after the bosses of Amazon.com, immigrants, or white supremacists calling for the
Apple, Facebook, and Google were blasted as murders of Jews and Black people. In the second
“cyberbarons” in congressional hearings (page 15)—a half of 2019, TikTok took down almost 50 million 40 to 49
grilling Microsoft was spared—the company said it videos it deemed inappropriate—more than triple
was in talks to buy TikTok. Like other social media the number YouTube deleted in the same period.
companies, TikTok faces criticism that it hasn’t done Last year the U.S. Federal Trade Commission 50 or older
enough to battle harassment and hate speech. A pur- fined TikTok $5.7 million after determining the
6%
chase would be a major shift for Microsoft, poten- personal information the app collected from chil-
tially exposing it to the kinds of concerns that landed dren broke U.S. privacy laws. And it’s now the sub-
its rivals in trouble with lawmakers: privacy, mis- ject of a further inquiry by the FTC and the U.S.
information, political debate, and the protection Department of Justice over allegations it didn’t
of minors. “Any company that voluntarily enlists in clean up its act, according to privacy advocates
the content moderation wars is a glutton for pun- who say they’ve been interviewed by the agen- 17
ishment,” says Nu Wexler, an independent commu- cies. One of those people, Josh Golin, executive
nications consultant who has worked at Twitter, director of the Campaign for a Commercial-Free
Facebook, and Google coaching executives on how Childhood, notes that Microsoft has dealt with
to deal with Congress. child safety before, particularly for services on its
TikTok initially became a hit among teenagers Xbox game consoles. And the company in 2009
posting silly videos—typically just a few seconds developed PhotoDNA, a web scanner that hunts
long—of themselves singing, dancing, and goofing down photos and videos of sexual abuse of chil-
around, often challenging friends to respond with dren. But the trust and safety problems at TikTok
similar clips. As people across the globe looked go far beyond what Microsoft has faced in the past,
for ways to ease the ennui of lockdown this spring Golin says. “It’s easier to crack down on those
and summer, TikTok swelled into a torrent of bite- things from the beginning,” he says. “When you
size content. Today it’s a profitable business with inherit a site where those practices are already so
worldwide sales of about $2 billion a year, Wedbush ingrained, it’s much more difficult.” ○ Satya Nadella
Securities Inc. estimates. The app has been down- With $137 billion in the bank, Microsoft can
ILLUSTRATION BY CHRIS NOSENZO. NADELLA: JASON ALDEN/BLOOMBERG. DATA: APP APE
loaded more than 2 billion times globally, including easily afford a cash deal, according to Bloomberg
165 million U.S. downloads, giving it the poten- Intelligence. But it’s wary of overpaying, espe-
tial to challenge Facebook Inc. and Google for cially because the pressure from Trump makes
online advertising. TikTok look like a distressed asset. At the same
That growth has brought scrutiny from U.S. law- time, Microsoft will want to avoid going so low
makers, who say ByteDance Ltd., the owner of the that China feels ripped off, according to a per-
service, might be harvesting Americans’ data on son familiar with the matter who asked not to be
behalf of the Chinese government. This spring, named discussing internal deliberations. Microsoft
Trump got involved, saying he wanted to restrict has a delicate relationship with China: Although
TikTok for security reasons and to punish China for some of its products have been banned and the
its handling of the coronavirus. On Aug. 6, Trump mainland makes up less than 2% of the compa-
escalated his squabble with China, signing a pair ny’s revenue, the government has allowed joint
of executive orders barring Americans from doing ventures selling the Xbox console and cloud ser-
business with TikTok and the WeChat messaging vices. Microsoft operates censored versions of
service from mid-September. For TikTok, at least, LinkedIn and the Bing search engine there, andYou can also read
